South African Legislation Regarding Annual Salary Increases

South African Legislation Regarding Annual Salary Increases

Everybody needs an annual salary increase, right? At the Tower Group, we understand that with costs increasing and remuneration levels barely able to keep up, workers in every industry and at almost every level want to know they can expect a little more each year; indeed, most of us feel we are even entitled to it.

3 Salary Increase Factors Covered by South African Legislation

So what are our rights as employers and employees when it comes to an annual increase? Keep reading the blog as we explore what South African law actually says about annual increases.

Salary Increase Factor #1: It’s at the Employers’ Discretion

The bad news is that annual increases are recommended to be considered by employers each year, but they are not mandated or enforced by any part of the country’s laws. What this means is that no employer is legally obligated to grant an annual increase to anybody, unless the employment contract contains an escalation clause which calls for a specific rise in remuneration from year to year. When increases are not specifically discussed in the contract between the employer and employee, there is absolutely no legal obligation for any increase to be granted at all.

Salary Increase Factor #2: It’s the Employee’s Right to Negotiate

While there is no legal need for an employer to grant an annual increase, an employee is well within his/ her rights to ask for one and to negotiate an agreement that is favourable to both parties. If the request is made in a reasonable way and the company values the employee’s contribution, management will be unlikely not to at least listen to the request. However, this does not mean that they have to grant the request or even consider a lower percentage than is asked for by the employee.

Salary Increase Factor #3: It’s a Matter of Maintaining Relationships

What this ultimately means is that annual increases, while desired by everybody – and indeed a requirement to keep up with the cost of living – is not a legal matter at all. It is really a question of the specific contract put in place between the employee and the company at the time of commencement, as well as the relationship the employee establishes with the management and the company as a whole. If the employee is a valued asset of the company then increases become a matter for two-way discussion, in which both parties are likely to want a favourable outcome.

The Bottom Line

A company that runs good HR practices and communicates with employees regarding the increase possibilities, together with employees who make a good contribution and are willing to negotiate, usually results in a resolution which, while not necessarily optimum, can at least be an acceptable compromise for all concerned. For more information on HR, recruiting and South African labour law, contact the Tower Group.

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